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Are Patent Lawsuits Really Declining?

New report shows drop
In recent patent lawsuits.
Are trolls declining?

A new report published at the end of October, 2014 shows a significant drop-off in the number of new patent infringement lawsuits filed in the third quarter. According to data analyzed by Unified Patents, a Los Altos, California company founded in 2012 to provide “operating companies an alternative resource to curb abusive patent litigation,” the number of patent infringement cases filed in the third quarter of 2014 fell 23% from the second quarter of the year. However, 2014 is still on track to be become the year with the second most patent case filings in history. 1,124 patent infringement cases were filed in the third quarter. Total patent lawsuits filed in 2014 are expected to be more than the 5,038 filed in 2012, which now holds the record for #2. The record high was reached in 2013.

The study found that in the third quarter:

· 58% of new patent litigation involved high tech industries (defined as hardware, software, and financial industries).

· 85% of the high-tech cases were brought by NPEs (aka, patent trolls), a slight decline from 88% the second quarter.

· The total number of cases filed by NPEs also declined.

Another study by Lex Machina showed that patent lawsuits filed in September were down 40% from September of the previous year. There are various theories about the recent “drop” – including that it only looks like a drop because of a recent spike. The drop follows a second quarter surge of filings in April of 2014, when NPEs were apparently concerned about a proposed patent reform bill that would have made back-dated reforms that challenged their business model. Stanford Law School Professor mark Lemley opined in the Lex Machina blog that more patent owners may have decided not to sue to enforce their rights after the US Supreme Court’s recent opinion in the Alice case and other NPE-unfriendly decisions.

Lemley said in early October:

In the last two months, we’ve seen over a dozen decisions invalidating software and business method patents on the basis of Alice. That’s a pretty strong deterrent to software plaintiffs whose patent isn’t directed to specific new computer technology.

However, in our humble opinion one quarter’s numbers aren’t enough to show whether there’s a major sea change in patent troll filings.

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